The real stories from inside the F1 paddock

Murdoch and Formula 1…

I notice that my old editor Quentin Spurring – known to all as Q – has been writing in recent days about the impact of the News Corporation Scandal on the Formula 1 world. He beat me to it by a day or so, which is only to be expected as he taught me much of what I know. The ongoing scandal has now led to the arrest of 10 people, including Rebekah Brooks, until last week chief executive of News International. It has also resulted in the resignation of Sir Paul Stephenson, the Commissioner of the Metropolitan Police. The next person in the firing line is James Murdoch, the son of Rupert Murdoch and chairman of News International. The arrests relate to phone-hacking and the cover-up that has followed. The News of the World newspaper has been closed down and many of Murdoch’s top management have resigned, including Les Hinton, the chief executive of Dow Jones, who was the head of News International when the alleged phone hacking is said to have taken place.

British prime minister David Cameron has announced a public inquiry to investigate the affair, once the police have finished their investigation. This will be headed by Lord Justice Leveson, who has been asked to look into the phone hacking and police bribery by the News of the World, and also to take a wider look at the culture and ethics of the British media.

Rupert Murdoch and his son James have been summoned to give evidence in parliament and the Federal Bureau of Investigation has launched its own investigation into News Corporation. The US Attorney General Eric Holder has also announced that the Department of Justice is investigating the company.

It is clear that politicians around the world see Murdoch’s problems as the long-awaited opportunity to escape from the powerful influence that Murdoch has had over them, allegedly using his newspapers and TV stations to sway public opinion in favour of those who offer him the most help.

News Corporation has already announced that it is abandoning its bid to gain complete control of satellite broadcaster BSkyB. There have even been suggestions that the Murdochs may be ousted from their empire by the other shareholders. At the moment they control 24 percent of News Corporation shares but have maintained control thanks to alliances with others. As the company’s share price tumbles on the different stock exchanges, the pressure will be on to separate the company from their influence, as billions of dollars depend on it. The departure of the Murdochs, at least from executive positions, would no doubt help the share price to recover. There is also increased resistance to the succession of James Murdoch.

Prince Alwaleed bin Talal al-Saud of Saudi Arabia is the second largest shareholder, with an estimated seven percent.

The scandal is significant for the Formula 1 world as it means that the much-rumoured bid to buy the Formula One group from CVC Capital Partners in unlikely to go ahead. News Corporation had announced its intention to bid for the rights in league with Fiat holding company Exor, but the scandal will blow that project out of the water – at least in the short- to medium- term. Even if the deal were to go ahead, it would still need clearance from the FIA President Jean Todt.

I’ve been wondering in recent days of whether this has all come to pass because of Formula 1? has BCE or Max even, begun to take pleasure in planting seeds with the likes of the BBC and other papers and offering information to them in order to keep the sport in the hands of CVC for that little bit longer?

The benefit here to BCE is that it will weaken the position of CVC when trying to sell. If no on can afford it, then I am sure BCE (or the teams – and perhaps this is the plan / plot?) can make a reasonable offer to take it off their hands and ensure that they haven’t made a loss.

As you’ve said many times Joe, CVC are a fund management company and there are no emotions, so they will be looking to get the best price. If that best price has been reduced due to market conditions then…..

Perhaps that is a little too conspiracist at this time on a Monday morning.

The truth will always arrive sooner or later. The cold, money-making power of the Murdochracy was never going to sit well with the intelligent passion of the F1 world. Now it has been exposed in all its fragility and immorality, let us hope the Beeb stays “on board” with its coverage of our beloved sport for the forseeable future.

And I thought the news about that ghastly bloke and his minions couldn’t couldn’t get any better – I’d completely forgotten about the black cloud he was hovering over F1. After the events of the last 2 weeks, I wouldn’t even put money on Bernie not getting sucked in over the coming months.

Wonderful, and thank heavens that there are still some decent journalists around (on this site, as well as at Kings Cross)!

I find myself wondering about any involvement by Max Mosley, since he had a very big axe to grind with News of the World. Wouldn’t be surprised if he’s on that list of victims Scotland Yard has evidently been sitting on for years. Didn’t he always say he was pretty sure who was responsible for tipping off the tabloids regarding his “extracurricular activities”? I guess the F1 world has moved on and that’s all ancient history now, but I’ve always wondered if someone else in the F1 world was involved in that mess, or if he became a scandal target just by being another sporting/political figure with a high profile. Either way, I bet he’s laughing his ass off now.

Purchasing BSkyB appears to be the only financial way for Newscorp to expand in future. Fox does well but has reached a plateau, the movie and publishing arms are notoriously hit and miss affairs, newspapers make no real money – the only way forward for a media group is to acquire big profitable areas like satellite tv and possibly sporting conglomerates. I can see Newscorp dumping James Murdoch out of the equation – this would likely allow it to return, fresh-faced, to purchase BSkyB and make the CVC bid if it turned out to be worth it to them.

I think News Corp is currently concentrated mainly on securing News corp instead of any bids to buy F1. Interestingly a friend sent me a link about how they are trying to present the News of the World amongst victims of hacking on Fox news!

I thought Murdoch et al. maintained control of the company by offering a complex share structure, A and B class shares; their A class retained voting rights but the B class shares which they distributed more widely, were lacking many voting rights?

I know it will be rather more complicated than that, with additional and greater nuances etc but I think that is the bones of it. If not, I am sure someone will set me straight!

The FT reporters seem fairly sure that Murdoch wont have abandoned his aspirations to take over BSkyB for ever; unless, of course, this continues to escalate. But in a year or so when this has all passed over…who knows.

Point of note – News Corp is sitting on more than enough cash to take CVC out completely. Moreover, shareholders are just as upset that the cash is doing nothing, as they are about the scandal. Murdoch rose because he could make deals, and then make them puke gold. Because of that, he was forgiven his foibles. Today, i hear Bernie talking about Channel 5. If that is designed to make a News Corp bid seems like a better idea, i don’t know what other fowl it is. (i worked for a ex- Desmond lieutenant, what’s said about him publicly is really nothing) Right now, Rupe is looking like he will go out disgraced. That’s not his style. There’s tons of logic to back up this deal, the irony of it being he has Max to contend with, and Max surely is a big player in both sides of this equation. Ahh, not lost his king-making touch, has Max . .

But, what must also be going through Rupe’s mind, is there’s no candidate to take News Corp through a decade of genuine reformation. Those calling for breakup or whatever to be applied to the company, miss the point that Murdoch is a master of upturning his own company. Certainly he’s not afraid of massive debt if he sees something that can be spun around, and i think the inactivity at News Corp of late is part to appease long term investors who want cash out, part to solidify the vindication of his deeply risky strategies, and part because of this Q as to who finishes the next big thing. Splitting up News Corp will emasculate it, something so desirable to other interests, that the suggestion, in Parliament, should be considered as a act of illegal political tithe and illicit subsidy, and investigated equally.

For poetic muse: it was Rupert Murdoch who did away with the STOP button on his presses. That has come true, in so many ways. We even have the SFO working on a Sunday.

Whoever says Murdoch ruined a fine tradition, needs to look closer at the history of newsprint, which was not only financially bankrupt*, but still tied to the apron of the ghosts of earlier pseudo-political monsters. At least, if you can make money, you can speak. (Whittam – Smith, and a few souls very much excluded)

There is a growing list of big names fallen, in recent years, in very strange circumstances. None of them however seem to be responsible for getting the world economy in such a mess and far far worse.

Back to Rupe, one of the reasons pols have been so fearful of him, is he was never clubbable (pun intended), never a true insider.

Anyhoo, a humorous and pleasantly glib take on it:

” Can you imagine that conversation with her new neighbors behind bars? “What are you in for, robbery? Drug dealing?” “No, newspapers.””

Max made a nice investment to pay the Mordochs back for the NoTW set up and the investment has come to full fruition. It is certainly fun to see this evolve. The intriguing aspect is the alliance between Murdoch and FIAT/Ferrari on the capital side. This would also hint at Montezemolo potentially having been part of the conspiracy to bring Mosley down.

F1Fan1998: before giving Max or Bernie too much credit, we should remember that this story came to light due to the efforts of the newspaper The Guardian, which is rather unlikely to be a close ally of either of them. They worked doggedly on the story for two years.

and for that, (see earlier Champerty, for foundation) and for the concept of good faith in contract, i find about the only saving graces of the last significant Labour – appointed Attorney General.

(seriously, those concepts rocked my boat, because they affect and positively reinforce the underpinnings of society. Was it legal blood money, dear Goldsmith? Best not asked.)

AuraF1,

on highly contemporaneous logic, yes. But that assumes a stable and content News Corp looking to emblazon past laurels, claiming what they created. Get them on their toes again, doing really new things, and it’s better they lever that smaller stake, because they’d be cannibalistic, yet again.

If i may be permitted, one last one as to the fouth estate’s influence:

this is middle brow, at best, career politicians, from good schools who accepted them, but aspirant families, because those schools have to make a profit to bear vicious costs, who earn tiny amounts, who have had no commercial experience, not much outside world, who in recent cases considered the press they now scorn hallowed and their helpers (what academic failure does not have a pushy parent somewhere?) and basically they claim they are bullied. No, i know the type, they were bullies, or would – be bullies, at such schools. always playing top trumps.

Whether grammar school, or Fettes, or better public schools who do occasionally attempt to enforce academia, there is no innocent amidst the politicians, until they can show how they were arm twisted into the meetings, the parties, and the hobnobbing.

I believe there are better books, as to who is to blame when temptation presents. It is always the man who is tempted.

It is the tyranny of mediocrity, as much of unearned universal suffrage.

One has to wonder at the wisdom of summoning the Murdochs to an interrogation by MPs, since there is a Police investigation going on and they will be unable to say anything which may be connected, though they may be very willing to do so in order to deflate some later police evidence casting it as public opinion. If the MPs grill hard enough it may not be possible to have proper trial of the Murdochs at all, at least a trial by jury since they would claim that the jury members are predisposed by means of the public investigations.

Having recently re-watched “Yes prime minister” I am more than a little sceptical of public enquiries. Once a “sound” chairman has been chosen the the enquiry will go in the direction desired by those who set it up. One only needs to remember Dr David, Princess Di, etc and the fact that Keith Allens new film has been banned in the only means that we await reports of it in detail from France (or maybe other less biased countries) then it is only a matter of time before it appears on the internet. We can rest assured that those in high positions will continue to be protected.

Joe, is it common in Britain or Europe for journalists to hack into phones? One defense I’m hearing from supporters of Fox/Murdoch is that this phone hacking is very common and this story is nothing but Murdoch haters going after him. I assume phone hacking is not common among British journalists.

Google too. And most of Old Europe industry, start with Cuccia, but i’ll just get rpaco started!

(funny aside to the goog, last i logged in to email, i was invited to their new social thing, which is supposed to have some geek cachet. I should have done a screenshot of the “but you know no-one, oh, well ..” message that popped up. Still, it is an exclusive club of one, i can attest . .**)

**oh, but they see my “social graph” through my emails, despite i am really quite private. No skin off my nose, but a thought.

. . .

Peter Coffman,

this is the newspaper who let themselves be koshed by letters from the gendarmes, instead of realizing that was a deafening alarm bell?

That’s four years they allowed themselves to see no evil etc. Or at least ruminate over their suspicions. No, something else happened to get them going again. How i understand it, anyhow. If they were actually profitable, would they have thought that way, gone to suck their thumbs?

. . .

guest,

i did. One less potential witness for Grib . . . Kirch was suing, and transferred his case to a company which survives him.

I think the true question is whether the News/Exor talk has put F1 on the table. There are plenty of players (institutional and private) who could make a bid for the rights if it was officially available. However, they have likely held their cards close to their chests waiting for the right time. The Bahrainies could, for example, decide to pay a high price to secure the rights in order to restore lost pride. As you rightly point out Joe, CVC are just in this to make money…

Rupert obviously has ability but his kids are ordinary, at best. Enemies (sensible people???) within the organisation will see this as a good opportunity to move on. Even so, News Corp will suffer a spectacular fall. It was Rupert who bred the goose.

I’d be dancing if I thought this was something to celebrate. Instead it feels quite Pyrrhic in that the only thing to come close to bringing this corrupt organization down was the active destruction and intrusion of untold numbers of peoples’ lives and privacy. It reflects poorly on our society: we only fuel these deeds by our insatiable, and often juvenile, need for distraction from our own lives.

It is, at best, a respite for F1 fans and teams, a chance to search out new forms of communications with it’s core audience, new means with which to connect and build a stronger sport and business. If we do not see major moves by big players in the media industry on the heels of this scandal, I’d be surprised – and if nothing changes in F1, I’ll be a bit pissed. This is a golden opportunity to grow the brand and increase the asking value/worth of the entire enterprise, making it even less likely it’ll become some pointless exercise in squeezing commercials into every last second of a race weekend. Oh, how I’d pray for the gods of media to be listening, if I believed in such a thing. Let this opportunity not fall into lazy or inept hands.

the problem isn’t the Murdochs, but any corporation that size which has as many vested interests as it does. With that much control of the media it is in NI’s interests to lie, cheat and distort the truth to their own advantage, so why wouldn’t they? Corporations like that need to be broken up, or preferably prevented from forming in the first place, as they would have been before the middle of the century.

That’s why I was so worried about their bid for F1, if the same company owned the sport, the channel it’s being broadcast on and the supplier that brings it into my home, then that doesn’t inspire competitive pricing and quality.

Derick, I feel that it might be advisable for the police to investigate other tabloids practice in phone hacking as well, as it seems strange for only one of them having used it.

But I would hope it is far from normal for most people, including government (I know how far fetched that might sound to some) and certainly credible media/journalists.

There are so many ways of getting to the bottom of an issue, afte first having a hunch, or overhearing/reading a glimmer of something. If you invest the time and know how to get to sources (as Joe shows us all regularly over here) and interpret that in its surroundings.

I just realized that if F1 goes FTA on Channel 5, I’ll be begging Sky to put it on Pay Per View. Begging, i tell ya, Nooooooooo!

Could there genuinely be a 10% conversion rate to a extended pay service (based on 6M viewers and 100 quid each). Maybe Karen would say not much chance? But, if it has to be C5, they’ll expect a bargain, so sell them the basics, take the core BBC setup in house, so we can have uninterrupted Brundleisms, and start adding archives, and i’d bite. Selling the basic race FTA lowers the threshold here. Oh, and make the darn feeds multi screen / window capable!

Biggus Jimmus,

i don’t see how his kids have accumulated the experience. Snr. is a rare creature, really almost forced to become exceptional. Being pretty much a kid trying to run a business, with no “training” you often look at things and wonder why they exist, and find no good reason. At that age, when most are fresh from uni, or still learning their trade, most are beholden and eager to learn. That bloody well changes, if it’s your outfit, and your responsibility. You get told all sorts by all people you instinctively trust, and even the best advice you get from your seniors is tinged with personal – political realities that are salt on cut flesh, because it comes from experiences you are decades away from appreciating. (n.b. how Rupe fairly coldly dismissed even closest older advisers, later) So whatever you’re going to do it will involve going over the same old same old, banging head against wall until you really truly know it all inside out, and then finally no-one can argue with you. Outside of business, painters and photographers e.g. will go over and over scenes and pictures seemingly insane numbers of times, to understand the nuances they experience. Business can be this subtle, but what i’m on about here isn’t taught in school as a discipline, and for most people in their jobs, other concerns are priority.

. . .

Tech note on the hacking thing: if they had actually bothered to break the very breakable air interface ciphers (which are amazingly inept), you might call this hacking.* Entering default passwords is more trespass. Bruce Schneier is still not onto this, but he has thoroughly reported the pathetic weaknesses of the GSM standard before. But, they wouldn’t do that, would they, far to much real risk of jail. (assuming they had a clue how) Via Bruce Schneier, this, as to how price for a “hack” went down, when it was made criminal:

*at 2 percent of global GDP, mobile phone companies are no mean lobby, and so this misuse of the word “hack”, not for the first time, has purpose.
. . .

I’m generally in favor of shaking up complacent media. Can’t say Murdoch’s programming / editorial is my cup of tea – i don’t subscribe to anything of his. But it comes down to a couple of cold facts: if you make no money, you will be beholden, either to a benefactor, or worse a government**, or often just as bad, your advertisers; if you make money, you have a shot at independence. Murdoch has at least shown one way of making money, and much of the history of the deep debts he incurred, and hence possibly the rapid trite “commercialism” which is a improper pejorative slung about by several “liberal” crowds. to get that paid, were origin entrenched graft and political paternalism. Funnily enough, this scandal has done more to break up those same invisible, pernicious, threads as Wapping ever did. Even in cockup, the old man is essentially at the same game. I wonder how much of this railing against the system is because of how he was treated by his beKnighted father?